Presentation of 2015 Audit Results. Cherokee County, Georgia September 30, 2015

Transcription

1 Presentation of 2015 Audit Results Cherokee County, Georgia September 30, 2015

2 Agenda Engagement Team Results of the 2015 Audit Financial Ratios Comments, Recommendations, and Other Issues Questions & Comments 1

3 Engagement Team Mauldin & Jenkins, LLC; General Information Founded in Large regional firm serving the Southeastern United States. Offices located in Macon, Atlanta, Albany, Bradenton, Chattanooga, and Birmingham employing approximately 260 personnel. In addition to our governmental practice, we have large banking, healthcare, not-for-profit, benefit plan and tax practices. Mauldin & Jenkins, LLC; Governmental Sector Largest specific industry niche served by the Firm representing 25% of Firm practice. Serve more governmental entities in Georgia than any other firm requiring over 65,000 hours of annual service. Approximately 90 professional staff persons with current governmental experience. Current auditor for over 300 total governments in the Southeast, including approximately: 37 State entities; 75 cities; 40 counties; 40 school systems; 90 special purpose entities; and, 77 governments receiving the GFOA s Certificate of Excellence for in Financial Reporting. Engagement team leaders for the Cherokee County James Bence, Engagement Partner 13 years of experience, 100% governmental Doug Moses, Engagement Quality Control Partner 17 years of experience, 100% governmental Josh Carroll, Engagement Manager 10 years of experience, 100% governmental Justin Davis, Engagement Senior 2 years of experience, 100% governmental 2

4 Results of 2015 Audit Our Responsibility Under Auditing Standards Generally Accepted in the United States of America (GAAS) We considered the internal control structure for the purpose of expressing our opinion on the County s basic financial statements and not providing assurance on the internal control structure. Our audit was performed in accordance with GAAS. Our objective is to provide reasonable not absolute assurance that the basic financial statements are free of material misstatement. The basic financial statements are the responsibility of the County s management. Report on 2015 Basic Financial Statements Unmodified ( clean ) opinion on basic financial statements. Presented fairly in accordance with accounting principles generally accepted in the United States of America. Our responsibility does not extend beyond financial information contained in our report. 3

5 Results of 2015 Audit (continued) Comprehensive Annual Financial Report A Comprehensive Annual Financial Report (CAFR) goes beyond the normal financial reporting required by accounting principles generally accepted in the United States. A CAFR includes at a minimum the following elements/sections: Introductory Section provides general information on the County s structure and services:» Includes Letter of Transmittal, Organizational Chart, List of Principle Officials, and a copy of the prior Certificate of Achievement for Excellence in Financial Reporting. Financial Section includes the basic financial statements, footnotes, and required supplementary information» Also includes the Independent Auditor s Report and Management s Discussion & Analysis Statistical Section includes a broad range of financial, demographic, and operational information for past ten years Is above and beyond what is required for the annual financial reporting! 159 counties in Georgia, only 33 received the award in 2014 ~ 21% 1 of 141 entities in the State of Georgia to receive in 2014 County has received the award eleven times 4

6 Financial Highlights General Fund Revenues increased approximately $3.4 million to close the year at $65.6 million. 5

7 Financial Highlights General Fund (continued) Expenditures increased approximately $3.6 million to close the year at $58.3 million. 6

8 Financial Highlights General Fund (continued) General Fund fund balance closed at $13.4 million compared to $11.2 million in prior year. Approximately 99% of fund balance is unassigned Unassigned is 22.8% of expenditures ~ 2.7 months of operations 7

9 Financial Highlights County Wide Assets: o The County s assets decreased approximately $81.6 million or 7.21% from $1.214 billion to $1.132 billion. This decrease can be attributed to the decrease in property taxes receivable and continued depreciation of County infrastructure. Liabilities: o The County s liabilities decreased from $218.8 million (as restated) to $152.5 million. The decrease is primarily attributed to the County's reduction of long-term debt and the reduction of the unearned property taxes of $61.6 milliion. Net Position: o The County s equity position decreased from approximately $997.7 million (as restated) to $982.6 million. Largest portion of the County s net position is capital assets net of related debt ~ $945.4 million of $982.6 million The County is reporting deficit unrestricted net position of $33.6 million Revenues & Expenses: o Program revenues increased from $45.4 million to $47.7 million ~ an increase of 5.2%. o General revenues increased from $115.8 million to $129.1 million ~ an increase of 11.5%. o Total expenses increased from $184.2 million to $191.9 million ~ an increase of 4.2%. 8

10 Required Communications Significant Accounting Policies The significant accounting policies used by the County are described in Note 1 to the basic financial statements. County implemented GASB Statements 68 and 71 related to pensions Restated opening balances ~ $34 million for net pension liability and related deferred outflows of resources The policies used by the County are in accordance with generally accepted accounting principles and typical government organizations. In considering the qualitative aspects of its policies, the County is not involved in any controversial or emerging issues for which guidance is not available. Management Judgment/Accounting Estimates The County uses various estimates as part of its financial reporting process including valuation of accounts receivable. Management s estimates used in preparation of financial statements were deemed reasonable in relation to the financial statements taken as a whole. We considered this information and the qualitative aspects of management s calculations in evaluating the County s significant accounting estimates. Financial Statement Disclosures The footnote disclosures to the financial statements are also an integral part of the financial statements and the process used by management to accumulate the information included in the disclosures was the same process used in accumulating the statements. The overall neutrality, consistency, and clarity of the disclosures was considered as part our audit. 9

11 Required Communications (continued) Relationship with Management We received full cooperation from the County s management and staff. There were no disagreements with management on accounting issues or financial reporting matters. Audit Adjustments Adjustments were proposed to the records of the County and have been recorded in the County s financial statements and are available with this presentation. Management Representation We requested, and received, written representations from management relating to the accuracy of information included in the financial statements and the completeness and accuracy of various information requested by us. Consultation with Other Accountants To the best of our knowledge, management has not consulted with, or obtained opinions from, other independent accountants during the year, nor did we face any issues requiring outside consultation. 10

12 Required Communications (continued) Significant Issues Discussed with Management There were no significant issues discussed with management related to business conditions, plans, or strategies that may have affected the risk of material misstatement of the financial statements. Information in Documents Containing Audited Financial Statements Our responsibility for other information in documents containing the County s basic financial statements and our report thereon does not extend beyond the information identified in our report. If you intend to publish or otherwise reproduce the financial statements and make reference to our firm, we must be provided with printers proof for our review and approval before printing. You must also provide us with a copy of the final reproduced material for our approval before it is distributed. Auditor Independence In accordance with AICPA professional standards, M&J is independent with regard to the County and its financial reporting process. There were no fees paid to M&J for management advisory services during 2015 that might effect our independence as auditors. 11

13 Comments, Recommendations, and Other Issues Recommendations for Improvements Findings and deficiencies We have met with management, discussed causes and solutions Management has provided corrective action plans to address in future Management Points - We have met with management, discussed causes and solutions 12

14 Comments, Recommendations, and Other Matters New GASB Standards- Implemented this year Statement No. 68, Accounting and Reporting for Pension Plans, requires governments providing defined benefit pension plans to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. Restatement to opening balances of $34 million Ended September 30, 2015 with $40.1 million net pension liability Plan is 59.4% funded ~ Average for 9 clients in ACCG is 75.9%; lowest is 57.0% Statement No. 69, Government Combinations and Disposals of Government Operations, provides accounting guidance for governments involved in a variety of transaction such as mergers, acquisitions, and transfers of operations. No impact on the County. 13

15 Comments, Recommendations, and Other Matters New GASB Standards Statement No. 72, Fair Value Measurement and Application, addresses accounting and financial reporting issues related to fair value measurements and generally requires investments to be measured at fair value. This statement requires measurement at acquisition value (an entry price) for donated capital assets, donated works of art, historical treasures, and similar assets and capital assets received in a service concession arrangement. These assets were previously required to be measured at fair value. Applicable September 30, This should not have an impact on the County. Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not Within the Scope of GASB Statement No. 68, was issued in June of 2015, and is effective for financial statements for periods beginning after June 15, Certain of these requirements will be applicable for September 30, This should not have an impact on the County. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, aims to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB). This will have no impact on the County as it applies to the Plan. 14

16 Comments, Recommendations, and Other Matters New GASB Standards Statement No. 75, Accounting and Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, aims to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB). Certain of these requirements will be applicable for September 30, This will make reporting for the OPEB plan comparable to new pension reporting standards. Statement No. 77, Tax Abatement Disclosures, This statement requires disclosure of tax abatement information about: (1) a reporting government s own tax abatement agreements; and (2) those that are entered into by other governments and that reduce the reporting government s tax revenues. 15

17 Free Quarterly Continuing Education for Governmental Clients Since March of 2009: Mauldin & Jenkins provides free quarterly continuing education for all of our governmental clients. Topics are tailored to be of interest to governmental entities. In an effort to accommodate our entire governmental client base, we offer the sessions several times per quarter at a variety of client provided locations resulting in greater networking and knowledge sharing among our governmental clients. We normally see approximately 100 people per quarter. Examples of subjects addressed in the past few quarters include: ARRA information and issues Internal Controls Revenues & Receipts Collateralization of Deposits Capital Asset Accounting Policies & Procedures Manuals GASB No. 51 Intangible Assets GASB No. 54 Governmental Fund Balance Internal Revenue Compliance (Payroll) GASB No. 60 Service Concession Arrangements GASB No. 63 & 65 Deferred Inflows and Outflows GASB Updates Internal Controls Expenses, Disbursements & Payroll SPLOST Accounting, Reporting & Compliance Grant Accounting, Processes and Controls Segregation of Duties Single Audits for Auditees Best Budgeting Practices, Policies and Processes CAFR Preparation GASB No. 61, the Financial Reporting Entity GASB No. 67 & 68, Financial Reporting for Pensions 16

18 Questions & Comments 17